05/24/2013

Regional Job Growth Helps Ward off Another Spring Swoon

Over the course of the relatively lethargic labor market recovery, both regional and national labor markets have made painfully slow, but fairly steady, improvements in the pace of job creation. However, for the three years prior to 2013, there emerged a phenomenon many have come to label a “spring swoon,” whereby in the spring/summer of every calendar year since 2010, headwinds—or specters of headwinds—have appeared, at least for a short time, that made many fear the bottom could be falling out of the economic recovery. With headwinds aplenty over the last few years, one can’t be blamed for being a bit cautious in the wake of some uninspiring economic data reports.

But—cross your fingers—maybe there’s a little less concern about a dip in labor markets this spring. Maybe this time, in 2013, regional labor markets are a bit more resilient after a few years of painful realignment.

Through April, the states in the Sixth Federal Reserve District have added roughly 127,000 net new jobs, according to data from the U.S. Bureau of Labor Statistics (BLS). Before we begin to cheer a possible end to the spring swoon phenomenon, however, we should check out a recent Wall Street Journal blog claiming the entire concept is a myth brought on by changing hiring patterns, a misaligned seasonal adjustment procedure by the BLS, and weaker hiring by small businesses.

Let’s take a look back at these so-called swoons. Although not a spring swoon, Sixth District states collectively shed 61,500 payrolls from June to September 2010. The sputtering regional labor market found more solid ground after September 2010 and carried over some momentum into 2011. Then in May and June 2011, the region shed 25,000 payrolls over the two-month period. However, the sharp downward lines on my graphs turned the other way, and fears were once again alleviated, at least temporarily.

But then in 2012, in another twist of fate, when economists were watching with near anticipation for the seasonal dip to return, the swoon reared its ugly head once again. Fortunately, this was the least dramatic one since the recession. Jobs were shed in May and July 2012 to the tune of 11,600 payrolls in the Southeast before returning to a positive trajectory.

Once again, earlier this year, as one might suspect, many economists were wondering if we would see another swoon. In fact, some preliminary data from the BLS had many believing more of the same was surely on the way, but with upward revisions announced on May 3 by the BLS reflecting a much more positive labor situation for March and April than was originally reported, major newspapers began running headlines such as “Investors Throw Off Fears of Spring Swoon.”

And now, this hopeful warding off of another spring swoon nationally seems also to be materializing in Sixth District labor markets. In April 2013, Sixth District states added a net 32,400 new jobs, after tacking on 36,000 in March. Additionally, though the size of each state’s contribution varied, every state in the region added payrolls in April.

Where and what kinds of jobs?

Florida has led the way in payroll growth over the last two months within the Sixth District, adding nearly 25,000 payrolls in March and 17,000 in April. Importantly, the gains were broad-based: retail, financial activities, professional and business services, and leisure and hospitality sectors have helped the Sunshine State bounce back with vigor over the last two months. Construction (+12,500 payrolls for March and April) and real estate (almost +4,000 new payroll jobs for March and April) reflect an ongoing rebound in the housing sector. Add to this the fact that Florida is one of only a few states where there is considerably less of an employment payroll drag from the government sector.

As a native Georgian, I have become accustomed to being one or two pegs below Florida in everything from the alphabet to college sports, so it’s not too surprising that Georgia has undergone the second highest rate of payroll creation over the last two months within the Sixth District. A few noticeable differences exist between the makeup of the new jobs in these two states, though. In Georgia, construction jobs are making their way back into the fray at a much slower pace than Florida (+2,000 for March and April), while payrolls in the real estate, rental, and leasing industries have been flat over the last two months of data. Leading the way in the Peach State is professional and business services, as industries in those sectors have added 12,000 payrolls over the last two months, March and April.

There was more news in last week’s regional employment report from the BLS. Much like how the BLS conducts two national surveys each month (one to calculate the change in payrolls, the other to calculate the unemployment rate), so it does on a regional level. In the April 2013 Regional Report, we discovered that an aggregate of Sixth District states now has the same unemployment rate as the rest of the nation for the month of April, 7.5 percent. While this may not yet seem like the time to uncork the champagne, it is worth noting that the Sixth District’s aggregate unemployment rate had been above the national average since February 2008, just around the time that everyone’s labor market nightmares began coming true.

Other significant changes in unemployment rates for the Sixth District in April included drops of 0.3 percentage point in Alabama, Florida, and Mississippi to reach 6.9 percent, 7.2 percent, and 9.1 percent, respectively. Louisiana, though it tacked on 0.3 percentage point to its unemployment rate in April, remains the lowest unemployment rate in the Sixth District at 6.5 percent. The chart below shows the historical trends for the Sixth District unemployment rate, the national rate of unemployment, and unemployment rates for each of our Sixth District states.

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